For the year ended December 31, 2016, Activision Blizzard's net revenues
presented in accordance with Generally Accepted Accounting Principles
("GAAP") were a record $6.61 billion, as compared with $4.66 billion for
2015, an increase of 42%. GAAP net revenues from digital channels were a
record $4.87 billion, growing 94% year-over-year. GAAP operating margin
was 21%. GAAP earnings per diluted share were a record $1.28, as
compared with $1.19 for 2015, an increase of 8%. On a non-GAAP
(redefined) basis, the company's operating margin was a record 35% and
earnings per diluted share were a record $2.18, as compared with $1.30
for 2015, an increase of 68%.

For the quarter ended December 31, 2016, Activision Blizzard's net
revenues presented in accordance with GAAP were an all-time record of
$2.01 billion, as compared with $1.35 billion for the fourth quarter of
2015, an increase of 49%. GAAP net revenues from digital channels were
an all-time record of $1.45 billion, growing 101% year-over-year. GAAP
operating margin for the fourth quarter was 21%. GAAP earnings per
diluted share were $0.33, as compared with $0.21 for the fourth quarter
of 2015, an increase of 57%. Non-GAAP (redefined) operating margin was a
fourth-quarter record 34%. On a non-GAAP (redefined) basis, the
company's earnings per diluted share were an all-time record $0.65, as
compared with $0.25 for the fourth quarter of 2015, an increase of 160%.

Activision Blizzard generated a record $2.16 billion in operating cash
flow for the year ended December 31, 2016, an increase of 71%
year-over-year. For the quarter, operating cash flows were $859 million.

Please refer to the tables at the back of this press release for a
reconciliation of the company's GAAP and non-GAAP (redefined) results.

Bobby Kotick, Chief Executive Officer of Activision Blizzard, said, "Our
record performance in 2016 further strengthened our position as the
world's leading standalone interactive entertainment company. For the
quarter and the year, we delivered our highest revenues, non-GAAP
redefined operating margins and earnings per share, well surpassing our
own expectations."

Kotick added, "The launch of Blizzard's Overwatch®
created a major new franchise, while King's mobile advertising tests are
very promising as the basis for meaningful new revenue streams. We
accelerated our efforts in esports and consumer products, enabling more
ways to celebrate and connect to our communities. Thanks to the strength
of our established franchises and the vitality of our new initiatives,
we are well positioned for growth in the years ahead."

Selected Business Highlights:

Audience Reach

Activision Blizzard had 447 million Monthly Active Users (MAUs)A in
the quarter.

Blizzard had its highest annual MAUsA in 2016 at 36
million, up 37% from 2015 and up 87% since 2014. Additionally,
Blizzard achieved record fourth-quarter MAUsA of 41
million. Overwatch became Blizzard's fastest game ever
to reach over 25 million players globally. The title broke the previouslaunch year record for unit sales set by Diablo®
III in 2012 and received 55 "Game of the Year" awards.
World of Warcraft® MAUsA grew
10% in 2016 and over 20% year-over-year in the fourth quarter on the
back of the successful third-quarter launch of the expansion, Legion™.
Also, Hearthstone®had
its highest annual MAUsA in 2016, growing more than 20%, in
part due to the fourth-quarter expansion, Mean Streets of
Gadgetzan™.

Activision had the biggest online player community in its history in
2016, with annual MAUsA of 50 million for the year, up 3%
from 2015 and up 23% since 2014. Fourth-quarter MAUsA were
51 million. Call of Duty® was
the number one console franchise globally in 2016, and in North
America for the 8th year in a row.1 Life-to-date
on current-generation consoles, the Call of Dutyfranchise
had 3 of the top 10 games.1

On October 28, 2016, Activision Blizzard Studios, in partnership with
Netflix, debuted Skylanders™ Academy, a
new TV series celebrating the beloved kids franchise. The second
season will be delivered in 2017, and a third season has been ordered
by Netflix.

King had 405 million MAUsA for the year and 355 million MAUsA
for the quarter, both of which were down year-over-year, but with
better per user engagement and investment. King had two of the top 10
highest-grossing titles in the U.S. mobile app stores for the
thirteenth quarter in a row.2

Deep Engagement

In 2016, consumers spent approximately 43 billion hours playing and
watching Activision Blizzard content, on par with Netflix and over
one-and-a-half times Snapchat.

Blizzard's fourth-quarter play time surpassed the previous record set
in the third quarter. Overwatch had its second and third
seasonal events, Halloween Terror and Winter Wonderland, each one
driving new records for engagement with the game. World of
Warcraft saw an increase in total play time for the quarter,
surpassing the Q3 expansion launch quarter and all non-launch quarters
in the last four years.

King's time spent per daily active user is now 34 minutes a day, up
quarter-over-quarter and year-over-year.

In 2016, Activision Blizzard's esports network, Major League Gaming,
extended its viewer reach on social platforms like Facebook and
Instagram by 50% year-over-year.3

In 2016, Activision hosted a successful Call of Duty World League
season, which had a $3.5 million prize pool across 16 hosted events.
The 2016 season had 120 million video views and more than twice the
time spent viewing compared to last year's season.

In November, Blizzard held its 10th BlizzCon®
with over 25 thousand attendees, over 10 million people around the
world tuning in to the event and a record number of pay-per-view
tickets sold through DirecTV. Blizzard also announced the formation of
the Overwatch League™ at BlizzCon.

Player Investment

Activision Blizzard revenues from in-game content reached a record
$3.6 billion in 2016, more than double the $1.6 billion in 2015.
Excluding King, revenues from in-game content grew 30% year-over-year.

Blizzard had record levels of quarterly and full-year in-game
revenues, driven by World of Warcraft in-game content
and continued strength of Overwatch customization items.

Activision had record levels of Q4 and full-year in-game revenues. Call
of Duty: Black Ops III add-on revenues outperformed Season
Pass and à la carte map packs combined, even with record Season Pass
participation.

King's fourth-quarter gross bookingsB per paying user
increased quarter-over-quarter and year-over-year to record levels.
The Candy Crush™ franchise continued its
momentum, with increased mobile gross bookings for the quarter and the
year compared with 2015.

Company Outlook:

Non-GAAP

GAAP

Outlook

Impact of GAAP

(in millions, except EPS)

Outlook

(redefined)

deferralsC

CY 2017

Net Revenues

$

6,000

6,000

300

EPS

$

0.72

1.70

0.15

Fully Diluted Shares*

765

765

Q1 2017

Net Revenues

$

1,550

1,550

(500)

EPS

$

0.25

0.51

(0.33)

Fully Diluted Shares*

760

760

*Fully diluted weighted average shares include
participating securities and dilutive options on a weighted
average basis.

As referenced on our July 29, 2016 call, if you would like to calculate
Non-GAAP metrics as previously defined, in order to do year-over-year
comparisons, you would add the impact of GAAP deferrals to the Non-GAAP
(redefined) metrics.

Currency Assumptions for 2017 Outlook:

$1.08 USD/Euro for current outlook (vs. average of $1.11 for 2016 and
$1.11 for 2015)

$1.25 USD/British Pound Sterling for current outlook (vs. average of
$1.36 for 2016 and $1.53 for 2015)

Capital Allocation:

The company also announced that its Board of Directors authorized a new
2-year stock repurchase program under which the company is authorized to
repurchase up to $1 billion of its outstanding common stock during the
period from February 13, 2017 through February 12, 2019.

The Board of Directors also approved a repayment of up to $500 million
of the company's outstanding debt during 2017, of which $139 million has
already been repaid during the first quarter.

The Board of Directors also declared a cash dividend of $0.30 per common
share, payable on May 10, 2017 to shareholders of record at the close of
business on March 30, 2017, which represents a 15% increase from 2016.

Conference Call:

Today at 4:30 p.m. EST, Activision Blizzard's management will host a
conference call and Webcast to discuss the company's results for the
quarter ended December 31, 2016 and management's outlook for 2017. The
company welcomes all members of the financial and media communities and
other interested parties to visit the "Investor Relations" area of www.activisionblizzard.com
to listen to the conference call via live Webcast or to listen to the
call live by dialing into 888-395-3237 in the U.S. with passcode 9509569.

About Activision Blizzard:

Activision Blizzard, Inc., a member of the S&P 500, is the world's most
successful standalone interactive entertainment company. We delight
hundreds of millions monthly active users around the world through
franchises including Activision's Call of Duty®, Destiny and
Skylanders®, Blizzard Entertainment's World of Warcraft®, Overwatch®,
Hearthstone®, Diablo®, StarCraft®, and Heroes of the Storm®, and King's
Candy Crush™, Pet Rescue™, Bubble Witch™ and Farm Heroes™. The company
is one of the Fortune "100 Best Companies To Work For®". Headquartered
in Santa Monica, California, Activision Blizzard has operations
throughout the world, and its games are played in 196 countries. More
information about Activision Blizzard and its products can be found on
the company's website, www.activisionblizzard.com.

1 Based on data from the NPD Group and GfK Chart-Track2U.S. ranking for Apple App Store and Google Play Store combined, per App
Annie Intelligence for fourth quarter 20163 Per
internal tracking

AMonthly Active User ("MAU") Definition: We monitor
MAUs as a key measure of the overall size of our user base and their
regular engagement with our portfolio of games. MAUs are the number of
individuals who played a particular game in a given month. We calculate
average MAUs in a period by adding the total number of MAUs in each of
the months in a given period and dividing that total by the number of
months in the period. An individual who plays two of our games would be
counted as two users. In addition, due to technical limitations, for
Activision Publishing and King, an individual who plays the same game on
two platforms or devices in the relevant period would be counted as two
users. For Blizzard, an individual who plays the same game on two
platforms or devices in the relevant period would generally be counted
as a single user.

B Gross bookings is an operating metric that represents the
total cash spent by players in the period for the purchase of virtual
items. King uses gross bookings to evaluate its results of operations,
generate future operating plans and assess performance. Gross bookings
is the total price paid by players, which includes indirect taxes (sales
tax or value added tax etc.), platform providers fees, and King's share
of revenues.

C Net effect of accounting treatment from revenue deferrals
on certain of our online enabled products. Some of our games' online
functionality represents an essential component of gameplay and, as a
result, a more-than-inconsequential separate deliverable. As a result,
we recognize revenues attributed to these game titles over their
estimated service periods, which is generally less than a year. The
related cost of revenues is deferred and recognized as an expense as the
related revenues are recognized. Impact from changes in deferrals refers
to the net effect from revenue deferrals accounting treatment for the
purposes of revenues, and together with the related cost of revenues
deferrals treatment and the related tax impacts for the purposes of EPS.
Internally, management excludes the impact of this change in deferred
revenues and related cost of revenues when evaluating the company's
operating performance, when planning, forecasting and analyzing future
periods, and when assessing the performance of its management team.
Management believes this is appropriate because doing so enables an
analysis of performance based on the timing of actual transactions with
our customers. In addition, management believes excluding the change in
deferred revenues and the related cost of revenues provides a much more
timely indication of trends in our operating results.

Non-GAAP (as previously defined) and Non-GAAP (redefined) Financial
Measures: In accordance with the updated Compliance and Disclosure
Interpretations issued by the SEC staff on May 17, 2016, beginning with
the reporting of our second-quarter 2016 results, we have reported our
financial results and provided our outlook using GAAP and non-GAAP
(redefined). We have historically provided Non-GAAP (as previously
defined) financial measures. The only difference between the two
measures is the inclusion (Non-GAAP (redefined)) or exclusion (Non-GAAP
(as previously defined)) of the impact from revenue deferrals accounting
treatment on certain of our online enabled products. Please see
materials from July 29, 2016 call for further details.

Non-GAAP Financial Measures: As a supplement to our financial
measures presented in accordance with Generally Accepted Accounting
Principles ("GAAP"), Activision Blizzard presents certain non-GAAP
measures of financial performance. These non-GAAP financial measures are
not intended to be considered in isolation from, as a substitute for, or
as more important than, the financial information prepared and presented
in accordance with GAAP. In addition, these non-GAAP measures have
limitations in that they do not reflect all of the items associated with
the company's results of operations as determined in accordance with
GAAP.

Activision Blizzard provides net income (loss), earnings (loss) per
share and operating margin data and guidance both including (in
accordance with GAAP) and excluding (non-GAAP) certain items. When
relevant, the company also provides constant FX information to provide a
framework for assessing how our underlying businesses performed
excluding the effect of foreign currency rate fluctuations. In addition,
Activision Blizzard provides EBITDA (defined as GAAP net income (loss)
before interest (income) expense, income taxes, depreciation and
amortization) and adjusted EBITDA (defined as non-GAAP operating margin
(see non-GAAP financial measure below) before depreciation). The
non-GAAP financial measures exclude the following items, as applicable
in any given reporting period and our outlook:

expenses related to stock-based compensation;

the amortization of intangibles from purchase price accounting;

fees and other expenses related to the King acquisition, inclusive of
related debt financings, and refinancing of long-term debt, including
penalties and the write off of unamortized discount and deferred
financing costs;

restructuring charges;

other non-cash charges from reclassification of certain cumulative
translation adjustments into earnings as required by GAAP; and

the income tax adjustments associated with any of the above items (tax
impact on Non-GAAP pre-tax income is calculated under the same
accounting principles applied to the GAAP pre-tax income under ASC
740, which employs an annual effective tax rate method to the results).

In the future, Activision Blizzard may also consider whether other items
should also be excluded in calculating the non-GAAP financial measures
used by the company. Management believes that the presentation of these
non-GAAP financial measures provides investors with additional useful
information to measure Activision Blizzard's financial and operating
performance. In particular, the measures facilitate comparison of
operating performance between periods and help investors to better
understand the operating results of Activision Blizzard by excluding
certain items that may not be indicative of the company's core business,
operating results or future outlook. Internally, management uses these
non-GAAP financial measures, along with others, in assessing the
company's operating results, and measuring compliance with the
requirements of the company's debt financing agreements, as well as in
planning and forecasting.

Activision Blizzard's non-GAAP financial measures are not based on a
comprehensive set of accounting rules or principles, and the terms
non-GAAP net income, non-GAAP earnings per share, non-GAAP operating
margin, and non-GAAP or adjusted EBITDA do not have a standardized
meaning. Therefore, other companies may use the same or similarly named
measures, but exclude different items, which may not provide investors a
comparable view of Activision Blizzard's performance in relation to
other companies.

Management compensates for the limitations resulting from the exclusion
of these items by considering the impact of the items separately and by
considering Activision Blizzard's GAAP, as well as non-GAAP, results and
outlook, and by presenting the most comparable GAAP measures directly
ahead of non-GAAP measures, and by providing a reconciliation that
indicates and describes the adjustments made.

Cautionary Note Regarding Forward-looking Statements: The
statements contained in this press release that are not historical facts
are forward-looking statements, including, but not limited to,
statements about (1) projections of revenues, expenses, income or loss,
earnings or loss per share, cash flow or other financial items; (2)
statements of our plans and objectives, including those related to
releases of products and services; (3) statements of future financial or
operating performance; (4) statements relating to the acquisition of
King and expected impact of that transaction, including without
limitation, the expected impact on Activision Blizzard, Inc.'s future
financial results; and (5) statements of assumptions underlying such
statements. The company generally uses words such as "outlook,"
"forecast," "will," "could," "should," "would," "to be," "plan,"
"plans," "believes," "may," "might," "expects," "intends," "intends as,"
"anticipates," "estimate," "future," "positioned," "potential,"
"project," "remain," "scheduled," "set to," "subject to," "upcoming" and
other similar expressions to help identify forward-looking statements.
Forward-looking statements are subject to business and economic risk,
reflect management's current expectations, estimates and projections
about our business, and are inherently uncertain and difficult to
predict.

The company cautions that a number of important factors could cause
Activision Blizzard's actual future results and other future
circumstances to differ materially from those expressed in any
forward-looking statements. Such factors include, but are not limited
to: uncertainties as to whether and when Activision Blizzard will be
able to realize the anticipated financial benefits from the acquisition
of King; the diversion of management time and attention to issues
relating to the operations of our acquired or newly started businesses;
sales levels of Activision Blizzard's titles, products and services;
concentration of revenue among a small number of titles; Activision
Blizzard's ability to predict consumer preferences, including interest
in specific genres, and preferences among hardware platforms; the amount
of our debt and the limitations imposed by the covenants in the
agreements governing our debt; adoption rate and availability of new
hardware (including peripherals) and related software; counterparty
risks relating to customers, licensees, licensors and manufacturers;
maintenance of relationships with key personnel, customers, financing
providers, licensees, licensors, manufacturers, vendors, and third-party
developers, including the ability to attract, retain and develop key
personnel and developers that can create high-quality titles, products
and services; risks relating to the expansion into new businesses,
including the potential impact on our existing businesses; changing
business models within the video game industry, including digital
delivery of content and the increased prevalence of free-to-play games;
product delays or defects; competition, including from other forms of
entertainment; rapid changes in technology and industry standards;
possible declines in software pricing; product returns and price
protection; the identification of suitable future acquisition
opportunities and potential challenges associated with geographic
expansion; the seasonal and cyclical nature of the interactive
entertainment market; the outcome of current or future tax disputes;
litigation risks and associated costs; protection of proprietary rights;
shifts in consumer spending trends; capital market risks; applicable
regulations; domestic and international economic, financial and
political conditions and policies; tax rates and foreign exchange rates;
the impact of the current macroeconomic environment; and the other
factors identified in "Risk Factors" included in Part I, Item 1A of our
Annual Report on Form 10-K for the year ended December 31, 2015.

The forward-looking statements in this press release are based on
information available to the company at this time and we assume no
obligation to update any such forward-looking statements. Although these
forward-looking statements are believed to be true when made, they may
ultimately prove to be incorrect. These statements are not guarantees of
our future performance and are subject to risks, uncertainties and other
factors, some of which are beyond our control and may cause actual
results to differ materially from current expectations.

Subscription, licensing and other revenues represent revenues from
World of Warcraft subscriptions, licensing royalties from our
products and franchises, value-added services, downloadable content,
microtransactions, and other miscellaneous revenues.

2

The company calculates earnings per share pursuant to the two-class
method which requires the allocation of net income between common
shareholders and participating security holders. We had, on a
weighted-average basis, participating securities of approximately 1
million and 3 million for the three months and year ended December
31, 2016 respectively, and 6 million and 8 million for the three
months and year ended December 31, 2015 respectively. For the three
months and year ended December 31, 2016, net income attributable to
Activision Blizzard, Inc. common shareholders used to calculate
earnings per common share, assuming dilution, was $253 million and
$962 million, respectively, as compared to total net income of $254
million and $966 million, respectively, for the same period. For the
three months and year ended December 31, 2015, net income
attributable to Activision Blizzard, Inc. common shareholders used
to calculate earnings per common share, assuming dilution, was $158
million and $881 million, respectively, as compared to total net
income of $159 million and $892 million, respectively, for the same
period.

Capital Expenditures for the three months ended March 31, 2014,
three months ended June 30, 2014, and three months ended September
30, 2014, was $37 million, $25 million, and $28 million,
respectively.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES

(Amounts in millions, except per share data)

Three Months Ended December 31, 2016

Net Revenues

Cost of Revenues—Product Sales: Product
Costs

Cost of Revenues—Product Sales: Software
Royalties and Amortization

Cost of Revenues—Subs/Lic/Other:
Game Operations and Distribution Costs

Reflects fees and other expenses related to the acquisition of King
Digital Entertainment ("King Acquisition"), inclusive of related
debt financings and integration costs.

4

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.

5

Reflects the loss on extinguishment of debt.

6

Reflects the income tax impact associated with the above items. Tax
impact on non-GAAP (redefined) pre-tax income is calculated under
the same accounting principles applied to the GAAP pre-tax income
under ASC 740, which employs an annual effective tax rate method to
the results.

The GAAP and non-GAAP (redefined) earnings per share information is
presented as calculated. The sum of these measures, as presented, may
differ due to the impact of rounding.

The company calculates earnings per share pursuant to the two-class
method which requires the allocation of net income between common
shareholders and participating security holders. For the three months
ended December 31, 2016, net income attributable to Activision Blizzard,
Inc. common shareholders used to calculate non-GAAP (redefined) earnings
per common share, assuming dilution, was $495 million, as compared to
total net income of $496 million, for the same period.

For purposes of calculating earnings per share, we had, on a
weighted-average basis, common shares outstanding of 744 million,
participating securities of approximately 1 million, and dilutive shares
of 13 million during the three months ended December 31, 2016.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES

(Amounts in millions, except per share data)

Year Ended December 31, 2016

Net Revenues

Cost of Revenues—Product Sales: Product
Costs

Cost of Revenues—Product Sales: Software
Royalties and Amortization

Cost of Revenues—Subs/Lic/Other:
Game Operations and Distribution Costs

Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.

4

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.

5

Reflects the loss on extinguishment of debt.

6

Reflects the income tax impact associated with the above items. Tax
impact on non-GAAP (redefined) pre-tax income is calculated under
the same accounting principles applied to the GAAP pre-tax income
under ASC 740, which employs an annual effective tax rate method to
the results.

The GAAP and non-GAAP (redefined) earnings per share information is
presented as calculated. The sum of these measures, as presented, may
differ due to the impact of rounding.

The company calculates earnings per share pursuant to the two-class
method which requires the allocation of net income between common
shareholders and participating security holders. For the year ended
December 31, 2016, net income attributable to Activision Blizzard, Inc.
common shareholders used to calculate non-GAAP (redefined) earnings per
common share, assuming dilution, was $1,643 million, as compared to
total net income of $1,650 million, for the same period.

For purposes of calculating earnings per share, we had, on a
weighted-average basis, common shares outstanding of 740 million,
participating securities of approximately 3 million, and dilutive shares
of 14 million during the year ended December 31, 2016.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESRECONCILIATION
OF GAAP NET INCOME TO NON-GAAP MEASURES(Amounts in millions,
except per share data)

Three Months Ended December 31, 2015

Net Revenues

Cost of Revenues—Product Sales: Product
Costs

Cost of Revenues—Product Sales: Software
Royalties and Amortization

Cost of Revenues—Subs/Lic/Other: Game
Operations and Distribution Costs

Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.

4

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.

5

Reflects the income tax impact associated with the above items. Tax
impact on non-GAAP (redefined) pre-tax income is calculated under
the same accounting principles applied to the GAAP pre-tax income
under ASC 740, which employs an annual effective tax rate method to
the results.

The GAAP and non-GAAP (redefined) earnings per share information is
presented as calculated. The sum of these measures, as presented, may
differ due to the impact of rounding.

The company calculates earnings per share pursuant to the two-class
method which requires the allocation of net income between common
shareholders and participating security holders. For the three months
ended December 31, 2015, net income attributable to Activision Blizzard,
Inc. common shareholders used to calculate non-GAAP (redefined) earnings
per common share, assuming dilution, was $183 million, as compared to
total net income of $184 million, for the same period.

For purposes of calculating earnings per share, we had, on a
weighted-average basis, common shares outstanding of 733 million,
participating securities of approximately 6 million, and dilutive shares
of 11 million during the three months ended December 31, 2015.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESRECONCILIATION
OF GAAP NET INCOME TO NON-GAAP MEASURES(Amounts in millions,
except per share data)

Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.

4

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effects of
taxes.

5

Reflects the income tax impact associated with the above items. Tax
impact on non-GAAP (redefined) pre-tax income is calculated under
the same accounting principles applied to the GAAP pre-tax income
under ASC 740, which employs an annual effective tax rate method to
the results.

The GAAP and non-GAAP (redefined) earnings per share information is
presented as calculated. The sum of these measures, as presented, may
differ due to the impact of rounding.

The company calculates earnings per share pursuant to the two-class
method which requires the allocation of net income between common
shareholders and participating security holders. For the year ended
December 31, 2015, net income attributable to Activision Blizzard, Inc.
common shareholders used to calculate non-GAAP (redefined) earnings per
common share, assuming dilution, was $958 million, as compared to total
net income of $970 million, for the same period.

For purposes of calculating earnings per share, we had, on a
weighted-average basis, common shares outstanding of 728 million,
participating securities of approximately 8 million, and dilutive shares
of 11 million during the year ended December 31, 2015.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESFINANCIAL
INFORMATION

For the Three Months and Year Ended December 31, 2016 and 2015(Amounts
in millions)

Three Months Ended

December 31, 2016

December 31, 2015

$ Increase(Decrease)

% Increase(Decrease)

Amount

% of Total1

Amount

% of Total1

Net Revenues by Distribution Channel

Digital online channels2

$

1,454

72

%

$

724

54

%

$

730

101

%

Retail channels

372

18

462

34

(90

)

(19

)

Other3

188

9

167

12

21

13

Total consolidated net revenues

$

2,014

100

%

$

1,353

100

%

$

661

49

Change in deferred revenues4

Digital online channels2

$

61

$

56

Retail channels

369

709

Other3

8

—

Total changes in deferred revenues

$

438

$

765

Year Ended

December 31, 2016

December 31, 2015

$ Increase(Decrease)

% Increase(Decrease)

Amount

% of Total1

Amount

% of Total1

Net Revenues by Distribution Channel

Digital online channels2

$

4,865

74

%

$

2,502

54

%

$

2,363

94

%

Retail channels

1,386

21

1,806

39

(420

)

(23

)

Other3

357

5

356

8

1

—

Total consolidated net revenues

$

6,608

100

%

$

4,664

100

%

$

1,944

42

Change in deferred revenues4

Digital online channels2

$

351

$

126

Retail channels

(368

)

(169

)

Other3

8

—

Total changes in deferred revenues

$

(9

)

$

(43

)

1

The percentages of total are presented as calculated. Therefore, the
sum of these percentages, as presented, may differ due to the impact
of rounding.

Net revenues from Other include revenues from our Major League
Gaming, studios, and distribution businesses.

4

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues on certain of our online enabled products.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESFINANCIAL
INFORMATION

For the Three Months and Year Ended December 31, 2016 and 2015(Amounts
in millions)

Three Months Ended

December 31, 2016

December 31, 2015

$ Increase(Decrease)

% Increase(Decrease)

Amount

% of Total1

Amount

% of Total1

Net Revenues by Platform

Console

$

586

29

%

$

655

48

%

$

(69

)

(11

)%

PC2

704

35

385

28

319

83

Mobile and ancillary3

536

27

146

11

390

NM

Other4

188

9

167

12

21

13

Total consolidated net revenues

$

2,014

100

%

$

1,353

100

%

$

661

49

Change in deferred revenues5

Console

$

499

$

705

PC2

(68

)

57

Mobile and ancillary3

(1

)

3

Other4

8

—

Total changes in deferred revenues

$

438

$

765

Year Ended

December 31, 2016

December 31, 2015

$ Increase(Decrease)

% Increase(Decrease)

Amount

% of Total1

Amount

% of Total1

Net Revenues by Platform

Console

$

2,453

37

%

$

2,391

51

%

$

62

3

%

PC2

2,124

32

1,499

32

625

42

Mobile and ancillary3

1,674

25

418

9

1,256

NM

Other4

357

5

356

8

1

—

Total consolidated net revenues

$

6,608

100

%

$

4,664

100

%

$

1,944

42

Change in deferred revenues5

Console

$

(184

)

$

(22

)

PC2

135

(56

)

Mobile and ancillary3

32

35

Other4

8

—

Total changes in deferred revenues

$

(9

)

$

(43

)

1

The percentages of total are presented as calculated. Therefore, the
sum of these percentages, as presented, may differ due to the impact
of rounding.

2

Net revenues from PC include revenues that were historically shown
as Online.

3

Net revenues from mobile and ancillary include revenues from
handheld, mobile and tablet devices, as well as non-platform
specific game related revenues such as standalone sales of toys and
accessories from the Skylanders franchise and other physical
merchandise and accessories.

4

Net revenues from Other include revenues from our Major League
Gaming, studios, and distribution businesses.

5

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues on certain of our online enabled products.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESFINANCIAL
INFORMATION

For the Three Months and Year Ended December 31, 2016 and 2015(Amounts
in millions)

Three Months Ended

December 31, 2016

December 31, 2015

$ Increase(Decrease)

% Increase(Decrease)

Amount

% of Total1

Amount

% of Total1

Net Revenues by Geographic Region

Americas

$

1,012

50

%

$

659

49

%

$

353

54

%

EMEA2

693

34

522

39

171

33

Asia Pacific

309

15

172

13

137

80

Total consolidated GAAP net revenues

$

2,014

100

%

$

1,353

100

%

$

661

49

Change in deferred revenues3

Americas

$

275

$

447

EMEA2

163

277

Asia Pacific

—

41

Total changes in net revenues

$

438

$

765

Year Ended

December 31, 2016

December 31, 2015

$ Increase(Decrease)

% Increase(Decrease)

Amount

% of Total1

Amount

% of Total1

Net Revenues by Geographic Region

Americas

$

3,423

52

%

$

2,409

52

%

$

1,014

42

%

EMEA2

2,221

34

1,741

37

480

28

Asia Pacific

964

15

514

11

450

88

Total consolidated GAAP net revenues

$

6,608

100

%

$

4,664

100

%

$

1,944

42

Change in deferred revenues3

Americas

$

(32

)

$

(55

)

EMEA2

(13

)

(20

)

Asia Pacific

36

32

Total changes in net revenues

$

(9

)

$

(43

)

1

The percentages of total are presented as calculated. Therefore, the
sum of these percentages, as presented, may differ due to the impact
of rounding.

Other includes other income and expenses from operating segments
managed outside the reportable segments, including our Major League
Gaming, studios, and distribution businesses. Other also includes
unallocated corporate income and expenses.

6

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products.

7

Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.

Our operating segments are consistent with the manner our operations are
reviewed and managed by our Chief Executive Officer, who is our chief
operating decision maker ("CODM"). The CODM reviews segment performance
exclusive of: the impact of the change in deferred revenues and related
cost of revenues with respect to certain of our online-enabled games;
stock-based compensation expense; amortization of intangible assets as a
result of purchase price accounting; and fees and other expenses
(including legal fees, costs, expenses and accruals) related to
acquisitions and financings.

Our operating segments are also consistent with our internal
organization structure, the way we assess operating performance and
allocate resources, and the availability of separate financial
information. We do not aggregate operating segments.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIESEBITDA
and Adjusted EBITDA

For the Trailing Twelve Months Ended December 31, 2016(Amounts
in millions)

Trailing TwelveMonths Ended

March 31,2016

June 30,2016

September 30,2016

December 31,2016

December 31,2016

GAAP Net Income1

$

363

$

151

$

199

$

254

$

966

Interest and other expense (income), net

52

66

53

43

214

Loss on extinguishment of debt

—

—

10

82

92

Provision for income taxes1

46

16

32

46

140

Depreciation and amortization

107

233

243

246

829

EBITDA

568

466

537

671

2,241

Stock-based compensation expense2

44

41

33

40

159

Fees and other expenses related to acquisitions3

34

4

4

4

47

Adjusted EBITDA (redefined)

$

646

$

511

$

574

$

715

$

2,447

Change in deferred net revenues and related cost of revenues4

$

(369

)

$

108

$

33

$

238

$

10

1

We recognized $27 million, $24 million, $12 million, and $18 million
of excess tax benefits from share-based payments as an income tax
benefit in the provision for income taxes for the three months ended
March 31, June 30, September 30, and December 31, 2016, respectively.

2

Includes expenses related to stock-based compensation.

3

Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.

4

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products.

Trailing twelve months are presented as calculated. Therefore the sum of
the four quarters, as presented, may differ due to the impact of
rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

Outlook for the Three Months Ending March 31, 2017 and Year
Ending December 31, 2017GAAP to Non-GAAP (redefined)
Reconciliation(Amounts in millions, except per share
data)

Outlook for theThree Months EndingMarch
31, 2017

Outlook for theYear EndingDecember
31, 2017

Net Revenues1

$

1,550

$

6,000

Change in deferred revenues2

$

(500

)

$

300

Earnings Per Diluted Share (GAAP)

$

0.25

$

0.72

Excluding the impact of:

Stock-based compensation3

0.06

0.25

Amortization of intangible assets4

0.24

0.99

Fees and other expenses related to acquisitions5

0.02

0.03

Restructuring costs6

0.02

0.05

Other non-cash charges7

0.02

0.02

Income tax impacts from items above8

(0.10

)

(0.35

)

Earnings Per Diluted Share (Non-GAAP redefined)

$

0.51

$

1.70

Net effect of deferred net revenues and related cost of revenues
on Earnings Per Diluted Share9

$

(0.33

)

$

0.15

1

Net Revenues represent the revenue outlook for both GAAP and
Non-GAAP (redefined) as they are measured the same.

2

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues on certain of our online enabled products.

3

Reflects expenses related to stock-based compensation.

4

Reflects amortization of intangible assets from purchase price
accounting, including intangible assets from the King Acquisition.

5

Reflects fees and other expenses related to the King Acquisition,
inclusive of related debt financings and integration costs.

Reflects non-cash accounting charges of $14 million to reclassify
certain amounts included in our cumulative translation adjustments
into earnings as required by GAAP for the three months ending March
31, 2017 and for the year ending December 31, 2017.

8

Reflects the income tax impacts associated with the above items. Due
to the inherent uncertainties in share price and option exercise
behavior, we do not generally forecast excess tax benefits or tax
shortfalls, with the exception of certain outstanding equity grants
which are set to expire this year if not exercised.

9

Reflects the net effect from deferral of revenues and (recognition)
of deferred revenues, along with related cost of revenues, on
certain of our online enabled products, including the effect of
taxes.

The per share adjustments and the GAAP and Non-GAAP (redefined) earnings
per share information are presented as calculated. Therefore the sum of
these measures, as presented, may differ due to the impact of rounding.

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